The incident took place at the High Energy Material Research Laboratory (HEMRL), a premier unit of the DRDO, yesterday afternoon.
A contract worker Laxmikant Sonawane, 26, was killed in the explosion, while Yogesh Kirtikar was injured, the police said.
The workers were cutting and dividing an explosive material into samples when it exploded, a senior HEMRL official said.
Both were rushed to a hospital, where Mr Sonawane was declared brought dead, he said, adding that Mr Kirtikar was discharged after treatment.
An investigation will be conducted into the incident by a high-level committee, he said.
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